Property taxes: How they are calculated and why you owe them is unknown

Colorado – Property taxes in Colorado have dominated the headlines on and off for the past month, and many property owners are expected to receive a Notice of Assessment (NOV).

For many people across the state, their home values ​​increased by an average of 40%. News5 heard from several El Paso County property owners who say their home values ​​have doubled by more than 80%.

Here’s what goes into growing up and some helpful words and phrases to know as you navigate the process.

First things first: the NOV likely isn’t an accurate picture of how much you’ll owe in property taxes for several reasons.

How your property tax is calculated


Colorado Property Tax Formula

The formula used to calculate how much you owe in property taxes involves several variables.

  1. Actual cost: This is the value determined by the county assessor.
  2. Rating: This rate is set by the state (it’s the same for everyone in Colorado, depending on the property type) and is used to calculate the “assessed value.” The rate for most businesses is 27.9% and currently, the rate for most homeowners is 6.76% (this is subject to change).
    In 2021, state lawmakers added more classifications for different assessment rates besides “residential” and “non-residential.”
  3. Local mill levy: This is determined by the taxing district where you live, which includes the county, city, school district, and other services such as a library district, water conservancy, or other taxing district.

What does TABOR have to do with this?

TABOR explained in 90 seconds

The Taxpayers Bill of Rights (TABOR) was created in 1992 when Colorado voters approved the plan. This requires several things, most notably, all tax increases must go to the voters for approval.

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It also limits how much money the government can collect by setting a cap each year, the amount above which is returned to taxpayers. The limit is set annually based on inflation plus population. That is, if the population increases by 5% and inflation by 5%, the income limit will increase by 10%.

With this cap, taxing districts adjust their mill levy in the fall to match the TABOR limits. The mill tax is then used in the second part of the equation to calculate your property tax.

Your property tax unknown

There are several factors that will affect your 2023 property tax bill, and it depends on the question on the November 2023 ballot.

What we know: Reductions are made for your assessed value. Mill taxes may be reduced based on TABOR limitations.
What we don’t know: How much reduction will there be?

In 2022, state lawmakers passed a package of property tax relief that said assessed values ​​would drop by about $15,000 on residential properties.

The question will now be on the ballot in November, which could create a $40,000 reduction in assessed values ​​and lower the assessment rate from 6.76% in 2023 to 6.7% for the 2023 and 2024 tax years. A lawsuit was filed regarding the constitutionality of the ballot issue. Opponents argue that it violates the “one entity” rule.

What do people refer to the Gallagher Amendment?

The Gallagher Amendment

In 1982, Colorado voters passed the “Gallagher Amendment,” which aimed to split the state’s property tax base by a 55/45 split. Commercial properties accounted for 55 percent, and homeowners accounted for 45 percent.

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The split has been maintained over the years by lowering the residential assessment rate used to calculate property taxes.

In 2020, Colorado voters decided to repeal the amendment. In doing so, it froze the residential property valuation rate to 7.15%. Currently, this figure is 6.76% by 2023.

How successful are appeals?

In El Paso County, on average, the “adjustment rate,” or the number of appeals that can be reversed, is usually just over 50%. El Paso County Assessor Mark Flucher said that as of Thursday, the county had received more than 11,500 home valuation applications this year.

Flucher said that’s a record, at least since he worked in the office in the 90s. According to him, it is possible to establish a higher number in the 1980s.

Related: Appeals Process

Some realtors continue to help homeowners appeal their property assessments. Virnisha Pastore, who works as a realtor at Cutting Edge Realtors in Colorado Springs, posted an appeal on social media for help for people who are planning to appeal.

He saw hundreds of pleas for help. As of Thursday, it had helped 193 homeowners file claims.

“The stories behind it are heartbreaking,” Pastore said, “they’re adults, they’re teachers who give their all for students, they’re people on fixed incomes, disabled veterans. Those who can’t. They allow to increase taxes by 50-60%”.

The pastor believes there are problems with the system for assessing property values, which shows a discrepancy between the data he studied and the appraiser’s claims.

“People who are in Colorado can’t live in Colorado,” Pastore said.

One issue he highlighted was a problem with property appraisers’ “appraisal tool.” In a few cases, he estimates about 15-20% of the people he’s helped don’t show up on the country’s comp tool.

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El Paso County Assessor Mark Flucher said this is common for the system, especially for rural properties.

Why have home values ​​risen so much?

There are several reasons for this. One, the period used to determine your home’s appraised value is done through the end of June 2022 and the 18 months before that. At the time, the housing market in El Paso County was extremely competitive.

“When homes would go on the market for an hour and get multiple offers,” Flucher said, “all that competition between buyers would really push prices up.”

Counties are audited annually by the State Board of Equalization to ensure these property values ​​are fairly assessed. If the state determines that it is incorrect, the state will come in and reassess the property for the county.

The state caps these prices at 95% to 105% of the home’s sales value. Some cushion has been included in recent estimates to accommodate this margin.

“The training room that Audition provides, we filmed for the bottom,” Flucher said.

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